Selling vs Building - What Should You Do?

The Silver Tsunami is happening and everyone from Private Equity to individual investors are calling. The question is are you prepared to sell, or are you better building your enterprise further.

In today's final episode for 2025, we explore the strategy behind the big deals being thrown around to determine if they are the best opportunity for you. We will also share some alternatives to better prepare yourself for when that eventual call will happen.

Please be sure to like, share, and subscribe to catch all our past episodes as well as our new ones for 2026.

[00:00:23.23] - Alice

Welcome to Books in the Biz, the show where real-world business meets real-world results. Host Bronson, and by business strategist Dan Paulson and veteran CFO Richard Beltry, this podcast breaks down the stories, trends, and financial insights shaping today's company. Dan brings decades of experience helping leaders simplify operations, build strong cultures, and scale with confidence. Rich adds his deep financial expertise from guiding organizations across healthcare, construction, logistics, and professional services. Together, they dig into what's really happening behind the numbers and what it means for owners, executives, and anyone trying to grow a stronger, smarter business. This is practical conversation, real talk, and tools you can use right now. Welcome to Books in the Biz.

[00:01:17.27] - Dan Paulson

How about that? New look, new year. How's it going, Rich?

[00:01:27.05] - Rich Veltre

Good stuff. How are you?

[00:01:29.12] - Dan Paulson

Good, Good hanging out here as we prepare this episode right before Christmas. So have you got all your Christmas shopping done? Or is that not your worry?

[00:01:45.29] - Rich Veltre

Is that somebody else's problem? No, I think we're done.

[00:01:50.29] - Dan Paulson

I hope we're done. That has not been my concern this year, so I'm keeping my fingers crossed. But anyway, we're going to talk about some different sorts of presents. We've been discussing this episode as we're wrapping up for 2025. A lot of what we've been talking about throughout this year has been related to companies selling or getting ready to sell, and I think that's still going to be a big priority going into '26 and beyond. But what should you do to be prepared for that? Because in my opinion, there's a lot of things that are happening relative to people knocking on your door. I was actually just cleaning out my phone voicemail. And I would say there were probably six different messages on there from a rather large M&A firm that was courting me to buy my company. And while I'm flattered, I'm not really looking to sell. But at the same point, if they're courting me, they're obviously reaching to a bunch of other people. So one of the things that we're running into is what are you actually getting for your business here? And I think we've talked in other episodes about private equity, and you came across something recently that I thought was pretty interesting.

[00:03:19.10] - Dan Paulson

Why don't you share what you were finding with the private equity side of things right now?

[00:03:25.05] - Rich Veltre

Well, similar to you, I'm getting phone calls from either a family office or a private equity firm or a various number of people saying, Hey, we'd like to invest in your company. And it becomes a bit of a question mark in my mind because the private equity firms are very much interested in accounting firms. That's been going on for a while, at least for the last couple of years. There's a lot news about bigger firms that have taken on private equity money. And it's a challenge. Well, there's a number of challenges that go along with it anyway. There's the challenge of the focus of the private equity firm is not always the focus of the target. So the target company has a focus on its clients or on its product or on its service that it provides. And the private equity has a focus on money, on profit, on bottom line, on growth, fast growth, because usually, they're looking at a couple of years that they want to flip it, like buying a car. So you take that into effect, and now it's time that you have to start looking at the fact that everything sounds great on just having a conversation, but then the devil's in the details.

[00:05:00.13] - Rich Veltre

So you have to dig a little bit and take a look at what they're actually offering and how it would actually work. Because nine times out of 10, the private equity firm is coming in. They're not going to run the company. They still want either you to run the company or they're going to put somebody in to run the company. So when that happens, you have to calculate If I'm going to be here for another two years or if I'm going to have to wait for certain events to happen, are you really getting all the money that they're talking about when they first come to see you? They're interested in your firm. You show that you have an interest back in taking their money and finding this as your succession plan, then you have to lay it out without just, oh, look at that. That fabulous offer they gave me. That huge number I could talk about it at parties. It's now, how are you getting that number? That detail is the part that you really have to investigate. Make sure you know exactly what's going to happen and how it's going to happen and how much you have to work afterwards while you're no longer in charge of your company?

[00:06:18.29] - Dan Paulson

Yeah, I was talking with the real estate business, and it wasn't their company that was talking to private equity at the time. It was a colleague's of theirs. So a peer was getting entertained by that PE. And he took the deal and he said he's now working harder on his business, not owning it, than he was working on his business when he did own it. And he's not seeing the results as the private equity company that's seeing the results. And I think that's one of the conversations that we've had a couple of different times is that there's these pie in the sky numbers that sound are outrageously great, but you have to still go about earning those numbers. And while the numbers, careful in how I say this, but the numbers are realistically achievable, And they're a stretch. And it's hit or miss. So if you hit the number great, you get the reward. If you miss the number, it's zero. And I don't I think a lot of people really read the fine print when it comes to that. If they're looking at private equity, because they're getting thrown these phenomenal numbers. I mean, some of the numbers that we've talked about with different people is just more than five times over, not equity, over EBITDA.

[00:07:53.00] - Dan Paulson

So you've got that situation going on. And I think people get lost in that thinking, oh, I'm going to make all this money. And And then as time progresses, they find that it's maybe not as sweet of a deal as what they thought.

[00:08:07.29] - Rich Veltre

It's funny. It's an interesting topic because there's a, I I don't know if you have Netflix, but if you watch Netflix, did you watch... I forget what it was. It just came out again for season 2. It's that guy from Sirhant Real Estate. The guy's name is... I forget his first name, but Sirhant owns the firm. He's 100 % owner of this firm in New York City. And they were talking throughout there that there was a PE firm that was courting him. And he's sitting there talking about, oh, they're going to I'm going to throw me $10 million. If they're going to throw me $10 million, sure, I could move faster. But with $10 million, what does that mean? I want to know how this is going to work because I want to know that I'm still going to have control because my name's on the door. Well, the end of the show, the last meeting, the PE comes in and says, you keep throwing around this $10 million, but we're not really thinking about $10 million. We're thinking about $45 million. So then they leave that as the cliffhanger that if he comes back for season three, then you'll find out.

[00:09:18.12] - Rich Veltre

But if you go Google it, you find out he took the money. So immediately I start questioning the same thing. Wait a minute, you took the money, but what's the rest of the deal? You have to hit certain targets. So your focus just changed, and you don't even know it yet, that your target has changed. And they're going to want to flip their interest in your firm at some point, and when's that going to be? How will you know? How will they let you know? I don't know. They could get a good offer tomorrow and be over.

[00:09:52.26] - Dan Paulson

Well, and how much of that... Most of us don't have a television show or a Netflix series to bank on to maybe cover some of that cost. So that's the other thing there. Maybe that's part of the deal. Well, you just basically outed the entire market. You now know that he took the deal. So it must have been sweet enough to take that. But I think that's where What I see on the deal is there's so much you get up front, there's so much you get in the middle that's earned. And then there's this equity that's tied in at the end. So it's like a three part deal. And of course, they show you that if all three parts work out perfectly, you get this huge, huge number. Sure. But part one is the only one that's really guaranteed. Part two, 50, 50 shot, depending upon how they structure what metric You got to hit to get there. And part three is all things being equal. If we get to that point and the company sells at the 10X that we're expecting to sell for, then you've got all this other equity tied into it.

[00:10:58.06] - Dan Paulson

And I think people just need to understand when they're throwing out these big numbers, you have to look at it first from the perspective of what are you getting today that's guaranteed? And is that acceptable to you? Is that acceptable? Because as you said, they're not going to You're going to run your company. You're going to run your company. You're just not going to have ownership in it. And they're going to tell you how you're going to run your company. And is that acceptable to you? And then if those two steps are acceptable to you, fine, you're 90 % of the way home, because then the third step is now it's the lottery, it's the crap shoot. So if they luck out and if everything hits right, and the markets go in the right direction, and timing is perfect, you now get this big payout at the end, which supersedes all the other payouts that you've had previous to that. And it's not that private equity is bad. It's just I think you need to take the emotion out of it, because I see a lot of decisions being emotionally made, not being practically made.

[00:12:01.10] - Dan Paulson

And when somebody knocks on your door, and as you pointed out with that television show or with that Netflix series, he's expecting 10 million. They're talking about 45 million. I don't know about you, but I would definitely be thinking about it at that point. I would also want to know what's in it for me or what do I need to do to hit that 45 million mark? Because that's not the number I'm going to get on day one. That's the number I'm going to get on year five, probably.

[00:12:31.22] - Rich Veltre

Yeah. So there's a lot that goes in that. But if somebody comes to my desk and turns it and says, you were thinking 10 and we're at $45, that would jog my brain. I would just be completely flabbergasted at that point. I have no idea what we're now talking about. That would upset every apple cart in my house, 100 %. So I do think that people have to take the emotion out of it, and they have to allow the numbers to not become new emotion. If they make you an offer, they don't make you an offer unless they've modeled it out. They know how this has to happen in order to make that $45 million investment. So if you take the emotion out, you should be doing the exact opposite. In other words, you should be making a model that's, how do I get the numbers? How does it get into my pocket? And then that way, you can actually take a look at it and really be realistic about your decision, as opposed to $45 million. My succession plan is set. It's done. But If you only get half of that, like you said, now you're going to have to reevaluate, because if you don't already know that half of that is okay, then you're in a totally different storm, and you no longer own it.

[00:13:59.12] - Rich Veltre

You no longer They're on your company.

[00:14:01.05] - Dan Paulson

That's right.

[00:14:01.25] - Rich Veltre

Well, at least in some cases, you may own a portion of your company, but you may not want to. Because at that point, you have a partner that was looking for certain amounts of profit, didn't get it, let's say, and you're still an owner. Do you want to be in that position? Don't know.

[00:14:23.11] - Dan Paulson

Because they will be directing you what you will be doing to fix the problem. And you may not agree with that.

[00:14:31.15] - Rich Veltre

And at the risk of... I don't want to sit there and turn every PE into this is a bad answer. Everything's bad, and PE is bad, and all that good stuff. But I think there are plenty of good people out there. But, again, you really just have to know what you are dealing with, what your end game is. And to a certain extent, you have to understand what their end game is. You just have to take it into stride that PE means they're going to sell your company at some point. And if their time frame is three years and you don't think that the numbers can be achieved within three years, reevaluate. You have to reevaluate.

[00:15:22.11] - Dan Paulson

Yeah, I was talking with a contractor that was actually going through the process of of getting bought out. And as it turns out, they backed out of the deal. And one of the big reasons why they backed out of the deal is legacy. So something that was very important to them was continuing on the company name, the family name of the business. And initially, when this person came in, they talked about leaving everything pretty much intact. And then as the deal moved forward, that person's personality changed. Now, this wasn't a private equity firm. This was actually a private investor that was getting into it. So again, as you pointed out, there's many good firms. There's a few bad firms. You really just have to watch what you're doing there. But in the end, what it came down to was this person got really belligerent about things, and their goal was to get the company ready to sell again. So they were going to wrap it up in a couple of years and then turn around and flip it. And they didn't care whether the name stuck or whether any of the family members stayed or anything like that.

[00:16:29.16] - Dan Paulson

They were They were done. So at that point, the owner said, this deal is off. I've got at least five generations of family members here that could potentially take it over. We're going to figure out how to do it ourselves. And I think that might be a good discussion to have here is, Rich, from your perspective, most people get approached by firms when they're not looking right now. We talked about the silver tsunami me in the fact that people are just... They know a lot of companies are going to be going up for sale or a lot of owners are going to start to think about what's that next move going to be. And if you're just minding your own business and doing what you normally do, and then somebody knocks on your door and says, hey, I'm going to give you all this money for your business. To your point, how do you know it's really worth that much? So trying to be more proactive on it, what would you tell a business owner should be the process that maybe they should take before somebody knocks on their door that would give them a better picture of what the potential of their business could become if they continue to do what they're currently doing?

[00:17:47.23] - Rich Veltre

Well, I think the short answer, call us.

[00:17:54.00] - Dan Paulson

I like that answer.

[00:17:55.05] - Rich Veltre

The slightly longer answer, somebody else you might think about, build a relationship with a valuation expert. Somebody who does valuations all day long is going to have an idea what your industry is worth or what they're selling for, and the market changes. So having a relationship with somebody that you can go back and forth with and maybe occasionally getting a valuation report or something that would be relative to your firm or your company, you can get a feel for, what do I think I could What do I think I can get for this? What do I think I can get for this if I only sold half of it? Or if I did something else with the family who's currently either in the business or is somehow interested in the business, the valuation will be my starting point. And if you don't like the valuation, that tells you what you have to work on, which is something you and I've been talking about. People should really be thinking ahead because at At some point, you're going to decide that you want to sell. And when you do, if you're not prepared, you're not going to get your number.

[00:19:06.04] - Rich Veltre

So if you want a better number, look at your business and why the valuation person said it was worth X. What are they doing to adjust the numbers? Because it's an opinion. They've gone in and taken a look at your books. Your financials are very important in this standpoint. You have to be able to say, here's my net profit. And then they're going to go through a series of adjustments that this is why it's not going to sell for this amount or that amount because it's got a handcuff on it, or it's got something else that has to pay eventually, or it's in a market that's slightly changing because of X, Y, and Z. They go through all of that. And if they do, then how are you combating against those? What adjustments are you making to be able to say to someone who comes in and says, well, I have a valuation report. Well, I have an answer against that valuation report. And then you negotiate. So be prepared, be ahead. And I think have a valuation person in your corner.

[00:20:08.29] - Dan Paulson

And I would add to that, if you start thinking that way, and if you know how these private equity People are talking, for example, a lot of them start saying five times multiple, 10 times multiple. Why not run those numbers yourself? What does a five times improvement in your business look like? What would you have to change to get that five times improvement? Same with the 10 times improvement. What would you have to change? What would you have to improve, invest? And then how long would it take to do those things? Because that in a lot of ways, when you start mathing it out, you're going to have to do the work anyway. I think you and I agree on that. Nobody's going to come in and just magically give you a bunch of money and promise you this huge multiple without saying, well, in order for you to get that, you're going to be here for X number of years and you're going to have to do X, Y, and Z. And by the way, your company is going to pay for those improvements anyway, which now I think that's where in that middle part of the equation of the three different steps, is where a lot of people struggle on actually hitting those numbers to get that payout, because you might have to invest in new software.

[00:21:22.17] - Dan Paulson

You might have to invest in hiring new people. You might have to invest in new equipment for them to get that. And they're going to be telling you to do that. So if that's the case, and you've already mapped out what you need to do to achieve that, then you also have the alternative to choose whether or not you want to do that yourself or whether you want somebody else to come along for the ride. And I would guess at least 50 % of the time, you might decide that it's probably worth it to do it on your own, versus bringing somebody else in, assuming it's going to be a quick fix. I don't know. What's your thoughts on that?

[00:22:04.20] - Rich Veltre

Yeah, 50 %.

[00:22:07.10] - Dan Paulson

Could be. Maybe better, maybe worse.

[00:22:09.19] - Rich Veltre

I think there's an advantage here, right? There's an advantage to you that a lot of people forget. You know the business better than anybody else. So PE comes in and says, we're going to do X, Y, and Z. You might be sitting there saying, there's no possible way you're going to do that. Why is that? Because you know the business better than they do. And you know some piece of information, and you might not even know what it is right now, but you probably know some piece of information that would allow you to be able to debunk what... I hate that word. You can debunk what they're actually going to try to accomplish. You might say, you're never going to hit that. But that's actually a great thing for you, because if they're never going to hit that, they were offering you that.

[00:22:59.16] - Dan Paulson

Right.

[00:23:00.24] - Rich Veltre

So you weren't going to hit that. So you weren't going to get your payout if you already know that's not going to work. So there is an advantage here to you, which most people think there's no advantage. Pe is smarter than I am Harvard, Wharton, whatever, all these other schools, all these smart people. Sometimes smart people don't see it.

[00:23:24.13] - Dan Paulson

Right. Or at the very least, it can force you to ask some different questions of them. For example, okay, based on my math, I don't see how this company can hit those numbers. How are you proposing that we do it? And what do you expect me to do to help hit those numbers. So now you're starting to learn a little bit more about what's actually going to be expected of you and your business in order to actually make that happen. And I agree with you. Sometimes it's okay to say, you know what, there's no way in hell this is achievable. But you also have to look at from your perspective as well. So now here's where I'll get on the PE or the investor side. Maybe there is something they know or that they can do differently that is going to allow you to achieve that growth that you couldn't do on your own Because we all have our cap as far as how far we can get without new knowledge being brought in. And that's where I think the more you can test these ideas, the more you can test these principles, the better off you're going to be when somebody does come knocking on your door to make that educated decision.

[00:24:35.13] - Dan Paulson

Is this something that, A, do I believe is possible, has potential? B, is this something I could do on my own? C, am I better taking a partner along with me to actually achieve those goals or not? So that's what I see with all of this.

[00:24:51.14] - Rich Veltre

I agree with that. I agree with that. There's always that alternative of if somebody puts in, I don't know, go pie in the sky Somebody's going to put in $100 million. You don't have $100 million. If you do, good for you. But if you don't, and they do, and that $100 million gets you there faster, this is where I think that model for you comes in. Let them do their $100 million model. What's yours for your cut of that $100 million? Or for the eventual sale of a company that suddenly has $100 million versus whatever you had in it before PE invested. So do Do that model, do those scenarios. And that way you can really say, I can do this or I can't do this.

[00:25:37.04] - Dan Paulson

Yeah. And maybe, you know what, even if you can't do it, but you can do half of that, 50 million, and you didn't have to bring anyone else along for the ride and you don't have to split with anybody else, is that a win? In my world, I'd say, hell, yeah.

[00:25:51.16] - Rich Veltre

I'd say, yeah, it's a $2 million. I don't have anybody's. I don't have an answer to.

[00:25:56.25] - Dan Paulson

Yeah. And you also don't have to worry about fine print in a contract that might, again, change that value to you, because usually when you bring in outside investors, they have other investors that they're getting the money to make the purchase of your business with. So you've got to consider who are they serving, who's their master? And you got to realize that you're not the first on the list, you're the last on the list. So keep that in mind along the way. Rich, I think for an end of your discussion, this is very good. And going into the New Year. I think this is a good place to start. You also mentioned that maybe we be a good first point of contact. So if they were to get a hold of us, how would they do that?

[00:26:42.02] - Rich Veltre

Well, you can always give me an email at rich@xcxo.net.

[00:26:46.21] - Dan Paulson

And you can give me an email at dan@xcxo.net. Be sure to like, share, and to subscribe to this podcast. And you'll get, I think we're at almost 130 or 40 different episodes now. Rich, we've been doing this for a little while. There's plenty here to talk about. And yeah, great job. And we will see you in 2026.

[00:27:11.25] - Rich Veltre

Here we go.

[00:27:14.18] - Dan Paulson

New Exit 2.

[00:27:16.23] - Rich Veltre

Thanks for listening to Books and the Biz.

[00:27:24.06] - Bob

If today's conversation sparked new ideas for your company, the team at XCXO can help you turn those ideas into action. Xcxo brings together seasoned executives, fractional CEOs, COOs, CFOs, and CXOs who step into your business with the experience, strategy, and leadership to drive real results. Whether you're trying to scale, strengthen operations, improve profitability, or prepare for transition, our experts help you move faster and lead with confidence. To learn more or start a conversation, visit xcxo.net. That's xcxo.net, your shortcut to stronger leadership and a better run business. Thanks again for joining us. We'll see you next time on Books and the Biz.